CHAPTER 9.

CUSTOMER RELATIONSHIP MANAGEMENT Organizations are emphasizing a customer-centric approach to their business practices because they know that sustainable value is found in long-term customer relationships that extend beyond todays business transactions. This customer-centric approach is known in businesses as customer relationship management (CRM) Internet and www makes suppliers easily accessible to customers. Its just a mouse click away. Lack of opportunity to make a first good impression on customers due to lack to personal contact.

CRM refers to personal marketing that utilizes information about customers to create offers that customers are more likely to accept. It is designed to achieve customer intimacy and is enabled by Information technology. Organizational strategy that is customer-focused and customer-driven. Assessing customers requirements and then providing high-quality, responsive service. Way of thinking and acting in a customer-centric fashion. Builds sustainable long-term customer relationships that create value for the company and customer. Helps acquire new customers, retain existing profitable customers, and grow the relationship with existing customers. Division of customers: prospective customers -> customers -> repeat customer-> lowvalue and high-value repeat customers. Customer churn: process of losing a certain percentage of customers.

Main objective: maximize the number of high-value repeat customers while minimizing customer churn by treating customers differently, as they have different needs and different values. TWO BASIC ELEMENTS OF SUCCESSFUL CRM POLICIES IDENTIFY MANY TYPES OF CUSTOMER TOUCH POINTS Organizations must recognize the numerous and diverse interactions that they have with their customers. These various types of interactions are referred to as customer touch points. Traditional CTP. Eg. Telephone contact, direct mailings, and actual physical interactions with customer in-store. Modern CTP. Eg. E-mail, websites, and communications via smart phones. DATA CONSOLIDATION Problem: Customer information are diversely located across functional areas of the business Difficulty in sharing data across various functional areas.

Interconnected systems built around a data warehouse makes customer-related data available to every unit of the business. This complete data set on each customer is called a 360-degree view of that customer. Data consolidation + 360-degree view = collaborative CRM Collaborative CRM systems provide effective and efficient interactive communication with the customer throughout the entire organizations by integrating communication s between organization and its customers in all aspects of marketing, sales, and customer support processes while enabling customer feedback. TWO MAJOR COMPONENTS OF CRM OPERATIONAL CRM It supports the front-office business processes, which involves direct interaction with customers, in the form of sales, marketing and service. Two major components of operational CRM: Customer-Facing Applications: those applications where an organizations sales, field service and customer interaction centre representatives actually interact with the customers. Applications includeI. Customer service and support: systems that automate service requests, complaints, product returns and requests for information. Customer Interaction Centres (CIC) - where organizational representatives use multiple communication channels like web, telephone, fax, and face-to-face interactions to support communication preferences of customers. Outbound telesales- using CIC to create a call list for the sales team, whose members contact sales prospects. This is an interactive discussion between the customer and the sales team. Inbound telesales-customers can communicate directly with CIC if they wish to initiate a sales order, inquire about the product or services before placing an order, or obtain information about a transaction that they have already made. CICs Information help desk-assists customers with their questions concerning products or services and also processes customer complaints.-> follow-up activities such as qualitycontrol checks, delivery of replacement parts or products, service calls, generation of credit memos, and product returns. Modern technology+ CIC= email, web interaction. Eg. Epicors software allowing emails and other information available to customer representatives. Live chat allows customer to connect to a company representative via instant messaging.

II.

Sales Force Automation (SFA): CRM system that automatically records all the aspects in a sales transaction process. Includes: - Contact management system- tracks all contact that has been made with a customer, purpose of contact and follow up .Eliminates duplicated contacts and redundancy -Sales lead tracking system-lists potential customers or customers who have purchased related products.

-Sales forecasting system- mathematical technique for estimating future sales. -Product knowledge system- comprehensive source of information regarding products and services. Built in product-building features-called configurators: enable customers to model the product to meet their specific needs. Eg.NikeID custom shoes.

III.

Marketing : enables marketers to identify and target their best customers manage marketing campaigns and generate quality leads for the sales teams provide opportunities to sift through volumes of customer data data mining develop purchasing profiles that will help in Cross-selling: practice of marketing additional related products to customers based on previous purchase. Eg. Amazon. Up-selling: sales strategy in which the business person will give customers the opportunity to purchase higher-value related products or services as opposed to or along with the customers initial product or service selection. Bundling: form of cross-selling in which a business sells a group of products or services together at a price that is lower than the combined individual prices of the products.

IV.

Campaign management: applications help organizations plan campaigns so that the right messages are sent to the right people through the right channels. Personalized messages can be sent to prospective customers.

CUSTOMER-TOUCHING APPLICATIONS Mid 1990s, introduction of Internet, the web and other electronic touch points to manage customer relationships. Customer interacts directly with these technologies and applications instead of face to face interactions. Such application is called Customer-touching CRM applications or electronic CRM (e-CRM) applications. Some are Search and comparison capabilities: allows customers to view a vast array of products and services and compare one from the other. Eg. www.mysimon.com Technical and other information and services: personalized experiences induce customers to make a purchase or remain loyal to the organization. Eg. Customer reviews on future shop website. Customized products and services: Mass customization process where customer can configure their own products. Additional services like viewing account balances or checking shipping status of orders.

 Personalized web pages: Organizations permit their customers to create their own personalized web pages- used to record purchase and preferences, problems and requests. Eg. American airlines personalized web pages. FAQs: Frequently asked questions- tool for answering repetitive customer queries without the need to actually communicate with person. E-mail and Automated Response: Inexpensive and fast, email is used to disseminate information, send alerts and product information and conduct correspondence regarding any topic. Loyalty Programs: recognize customers who repeatedly use a vendors products or services. Program is used to mine the data and learn about customer behaviour. Eg. Airlines frequent flyer program.

BENEFITS OF OPERATIONAL CRM Efficient, personalized marketing, sales and service. 360 degree view of each customer Ability of sales and service employees to access a complete history of customer interactions with he organization, regardless of touch point.

Operational CRM involved in Caterpillar, Inc Assist organization in improving sales and account management by optimizing the information shared by multiple employees and streamlining existing processes. Form individualized relationships with customers, with the aim of improving customer satisfaction and maximizing profits. Identify the most profitable customers and provide them the highest level of service. Provide employees with the information and processes necessary to know their customers Understand and identify customer needs, and effectively build relationships among the company, its customer base and its distribution partners.

ANALYTICAL CRM

Analyze customer behaviour and perceptions in order to provide actionable business intelligence. Provides information on customer requests and transactions as well as on customer responses to an organizations marketing, sales and service initiatives. Create statistical models of customer behaviour and value of customer relationships over time Forecasts of customer acquisition, retention and loss

 Important Technologies: data warehouses, data mining, decision support, business intelligence technologies. Analysis-> information is delivered in form of reports and digital dashboards. Purpose of customer analysis: 1. Designing and executing targeted marketing campaign 2. Increasing customer acquisition, cross selling, and up-selling 3. Providing input into decisions relating to products and services. 4. Providing financial forecasting and customer profitability analysis.

OTHER TYPES OF CRM 1. On-demand CRM: On-premise or on-demand. On-Premise (Traditional) They purchased the systems and installed them on site, expensive, time-consuming, and inflexible. On-demand (modern) System that is hosted by an external vendor in the vendors data centre lowers cost, plus employees do not require Training as they just need to know how to access and use it. Concept of on-demand is known as utility computing/software-as-a-service. Disadvantage of On-demand CRM: 1. Unreliable vendor means no CRM functionality. 2. Hosted software is difficult or impossible to modify and only vendor upgradable. 3. Difficult to integrate vendor-hosted CRM software with organizations existing software 4. Giving strategic customer data to vendors carries risk 2. Mobile-CRM: interactive CRM system that enables an organization to conduct communications related to sales, marketing and customer service activities through a mobile medium for the purpose of building and maintaining relationships with its customers. 3. Open-source CRM: CRM software whose source code is available to developers and users. Can be implemented either on-promise or on-demand. Eg of CRM vendors: SugarCRM, Concursive, vtiger. Benefits: favourable pricing, wide variety of applications, easy to customize- to meet specific needs Moreover updates and bug fixes occur rapidly, and extensive support information is available free of charge. Disadvantage: risk involves quality control.

Lack of central authority Companies need to have the same information technology platform in place as the platform on which the open-source CRM was developed.